Media reports suggest house prices are going to fall. Is that likely?
House prices are largely driven by supply and demand. Because there is a shortage of homes in the UK, house prices should rise, not fall. However, the housing market fluctuates, which means it’s tricky to predict whether house prices will go up or down.
Another consideration is that government legislation demands that all rental properties must achieve an EPC rating of E or higher by April 2023. It’s likely that landlords will remove properties that can’t achieve this rating from the rental market, which will push rent prices up. We anticipate that this will prompt more people to save money by buying a new home.
Interest rates are increasing. Will I really be able to afford the mortgage?
If interest rates continue to rise, it makes sense to buy now and fix monthly mortgage repayments at the current rate. Fixed rate mortgages are generally set for a period of 2 or 5 years. Currently, a 5 year fixed rate mortgage is lower than 2 year one. This suggests lenders expect interest rates to come down in the medium term.
Will I be able to get a mortgage?
The key to securing a mortgage is to use a professional, knowledgeable Independent Financial Advisor – specialist new build broker The Mortgage Brain is a good place to start. They have access to the whole lender market, and good relationships with lenders so they get information directly, and more swiftly, than say a high street IFA. Plus, with mortgage products and rates changing, only a specialist new build IFA can keep up!
Will the cost of living crisis mean I can’t afford to move?
All the headlines tell us the cost of living is rising, but you can cut costs by buying a new build home. For instance, new builds are designed to be energy efficient and can significantly reduce your annual fuel bills. In fact, a report by the NHBC Foundation suggested that a new build home could save you up to 50% on your energy costs, when compared to a similar sized Victorian home.*
Shall I buy now or wait until next year?
Interest rates and house prices could fall, but they could rise, too. If you buy now, you can move into the home you want straight away; but if you wait, house prices and interest rates may not fall like you’d hoped and you could miss out on owning that home you’ve fallen in love with.
What if I stay in rented accommodation and see what happens?
The continued shortage of rental properties is likely to see rental prices rise. What’s more, once a tenancy agreement is up for renewal, you could be at risk of your landlord increasing your monthly rent. If you buy a new build with a fixed rate mortgage, your monthly payments will be fixed for 2-5 years and your energy bills will be significantly less. Meaning you’ll have more to spend on the things you love.